FCC denies Comcast request; “integration ban” coming in July

Beginning in July, cable operators can no longer offer set-top boxes that …

The FCC Media Bureau yesterday put the kibosh on Comcast's request to ditch the "integration ban" that goes into effect on July 1, 2007. The FCC decision means that the ban will go forward as scheduled and cable operators will no longer be able to distribute set-top boxes with an integrated security component.

It all sounds pretty arcane, but the integration ban has been the subject of tremendous controversy ever since the FCC proposed it several years ago. Congress directed the FCC to bring a bit of competition to the market for TV "navigation devices" (usually set-top boxes), if possible, and the FCC hit on a plan: require cable operators to offer a separate security module that could be plugged into a set-top box or television from any manufacturer and properly descramble channels. The CableCARD was born.

The consumer electronics industry loved the idea, because it gave them a way to control the television again. Equipment makers could build any box they wanted, secure in the knowledge that a CableCARD would allow full access to any cable company's lineup. But there was still one problem: the cable industry was allowed to market its own boxes, and these were not required to use CableCARD.

The consumer electronics people worried the cable industry would do only the bare minimum to get CableCARD working, and why shouldn't it? There was little incentive for cable to develop and fine-tune a technology that would only benefit its rivals.That's why the FCC also established an "integration ban" for cable companies that would prevent them from integrating both navigation and security functions into a single box. Instead, everyone would have to use CableCARD.

The ruling has garnered nothing but complaints from the cable industry, which argues that forcing it to do things this way will drive up costs, which will then be passed along to customers. One of the major goals of FCC policy has been to develop a robust market for low-end cable boxes for less-affluent consumers to purchase cheaply without being locked into monthly rental fees. Comcast and others complained that the FCC wanted two contradictory things: low-cost boxes and CableCARD in every box.

Downloadable security

But the FCC reiterated its commitment to the July 1 deadline and pointed out that cable companies don't actually need to use a CableCARD at all. CableCARD is just one way of separating the security and navigation functions, but or promising technology called DCAS is on the horizon. DCAS (downloadable content access system) schemes use a security program that each cable operator can download into the set-top box; no physical CableCARD-style device is needed. The advantages are many: lower hardware costs, ability to update security schemes at any time, more flexibility.

Unfortunately, the major cable firms have been unable to get a working DCAS system together in time to meet the July deadline, and they believe that the FCC should waive the ban until such time as DCAS boxes are widely available. The FCC also responded to that objection by pointing out in a separate statement that Beyond Broadband Technology has already developed a working set-top box that uses downloadable security, and the box is cheap. The company has beaten CableLabs (a research company operated by the major cable operators) to market, but its system won't be compatible with the forthcoming CableLabs DCAS implementation. But it's available today, and proves that cable operators who want to use downloadable security can do so in a cost-efficient way.

The FCC ruling has garnered reaction from a whole host of consumer groups that aren't usually associated with cable issues. The head of the Hispanic Federation said in statement that "the FCC mandate to impose a new regressive tax on American consumers who use set-top boxes to access their cable programming will unjustly hurt middle and low income households in Hispanic neighborhoods struggling to bridge the digital divide." She added, "The ban will divert critical resources to the manufacture and deployment of yesterday?s technology instead of encouraging companies to invest in new downloadable security that will speed the transition at much lower costs."

The FCC's reaction is simple: downloadable security is here today, and the fact that CableLabs doesn't have its own version working yet is no reason to delay the ban any further.